EX-99.1 2 ea177579ex99-1_chansoninter.htm PRESS RELEASE

Exhibit 99.1

 

Chanson International Holding Announces Fiscal Year 2022 Financial Results

 

Urumqi, China, May 1, 2023 /PRNewswire/ -- Chanson International Holding (Nasdaq: CHSN) (the “Company” or “Chanson”), a provider of bakery, seasonal, and beverage products through its chain stores in China and the United States, today announced its financial results for the fiscal year ended December 31, 2022.

 

Mr. Gang Li, Chairman of the Board of Directors and Chief Executive Officer of the Company, commented, “In fiscal year 2022, we strove to build and maintain our business resilience to offset the negative impact of the challenging macroeconomic environment and the resurgence of COVID-19 in China (the “2022 Outbreak”). Therefore, we shifted our focus to our United States stores and achieved a remarkable year-over-over revenue growth of 99.6% from them. As a result of our strategic expansion plans, including the opening of new stores in New York City, we generated significant revenue growth from bakery products, beverage products, and eat-in services. Our recent listing on Nasdaq in March 2023 represented a significant milestone for us and a testament to all the hard work and efforts of our dedicated team. Looking ahead, we remain committed to expanding our product selection, opening more stores across the United States, and enhancing our brand awareness to create more value for our shareholders. We are grateful for the trust our customers have placed in us and will continue to develop new products, provide high-quality services and improve customer satisfaction. We believe our capabilities and experience position our company well for long-term growth, and we are confident that our continued growth and expansion will result in greater success in the future.”

 

Fiscal Year 2022 Financial Results

 

Revenue

 

Total revenue decreased by 9.7% to $13.3 million in fiscal year 2022, from $14.7 million in fiscal year 2021. The decrease in the Company’s revenue was due to lower revenue from its stores in China, which was partially offset by the increased revenue from its United States stores.

 

China Stores

 

●Revenue from China stores decreased by 25.8% to $9.5 million in fiscal year 2022 from $12.8 million in fiscal year 2021. The decrease was primarily due to decreased revenue from bakery products as well as other products.

 

●Revenue from bakery products decreased by 25.6% to $8.7 million in fiscal year 2022 from $11.7 million in fiscal year 2021. The decrease was due to impact by the 2022 Outbreak, which adversely affected the operations of the China stores and the production of the central factory starting from August 10, 2022. Additionally, all the China stores and the central factory were closed between October 5, 2022 and November 30, 2022, during which the China stores only generated limited online sales and group sales.

 

●Revenue from other products decreased by 28.6% to $0.8 million in fiscal year 2022 from $1.1 million in fiscal year 2021, among which, revenue from seasonal products decreased by 28.6% to $0.7 million in fiscal year 2022 from $1.0 million in fiscal year 2021, and revenue from beverage products decreased by 28.9% to $0.1 million in fiscal year 2022 from $0.1 million in fiscal year 2021. The impact of the 2022 Outbreak, as mentioned above, contributed to the decline in revenue from these products.

 

 

 

 

United States Stores

 

●Revenue from United States stores increased by 99.6% to $3.8 million in fiscal year 2022 from $1.9 million in fiscal year 2021. The increase was due to increased revenue from beverage products, bakery products, and eat-in services.

 

●Revenue from bakery products increased by 29.3% to $0.6 million in fiscal year 2022 from $0.5 million in fiscal year 2021. The increase was primarily due to the opening of Chanson 355 Greenwich LLC (“Chanson Greenwich”) in December 2021, a new store that generated an additional $0.25 million in revenue. This increase was partially offset by a decrease of $0.11 million in revenue from Chanson 23rd Street LLC (“Chanson 23rd Street”) due to increased competition from rival bakery brands that recently opened new stores in New York City, resulting in customers having more options and affecting sales of Chanson 23rd Street’s bakery products.

 

●Revenue from beverage products increased by 104.8%, to $2.0 million in fiscal year 2022 from $1.0 million in fiscal year 2021. The increase was mainly due to the $0.6 million increase generated by the newly opened Chanson Greenwich and the $0.4 million increase generated by Chanson 23rd Street. Chanson 23rd Street’s cocktail bar launched several new types of cocktail products with a variety of flavors and styles, which became popular among customers and the cocktail bar was often fully booked by reservation during weekends. Meanwhile, Chanson 23rd Street managed to increase the prices of its cocktail products, which resulted in higher revenue.

 

●Revenue from eat-in services increased by 166.6%, reaching $1.1 million in fiscal year 2022 from $0.4 million in fiscal year 2021. The increase was mainly due to the addition of the new store, Chanson Greenwich, which generated $0.8 million in increased revenue from eat-in services.

 

Gross Profit and Gross Margin

 

Gross profit decreased by 11.9%, to $6.1 million in fiscal year 2022 from $6.9 million in fiscal year 2021, primarily due to the overall decrease in revenue. Gross margin also decreased slightly by 1.2 percentage points to 46.0% in fiscal year 2022 from 47.2% in fiscal year 2021.

 

Operating Expenses

 

Operating costs were $7.5 million in fiscal year 2022, compared to $7.4 million in fiscal year 2021.

 

●Selling expenses decreased by 10.4%, to $3.7 million in fiscal year 2022 from $4.1 million in fiscal year 2021. The decrease in selling expenses was primarily due to the decrease of $0.6 million from China stores, as the Company’s business operation was adversely affected by the 2022 Outbreak, partially offset by a $0.2 million increase in selling expenses incurred by the newly opened Chanson Greenwich.

 

●General and administrative expenses increased by 18.3%, to $3.8 million in fiscal year 2022 from $3.2 million in fiscal year 2021. The increase was primarily due to higher general and administrative expenses of $0.6 million related to stores in the United States, including full-year operating costs of the newly opened Chanson Greenwich as well as the higher rental expenses for Chanson 1293 3rd Ave LLC and Chanson 2040 Broadway LLC stores during the renovation period. The increase was partially offset by lower general and administrative expenses of $42,621 related to stores in China, where business operations were adversely affected by the 2022 Outbreak.

 

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Net Income (Loss)

 

Net loss in fiscal year 2022 was $1.3 million, compared to net income of $0.5 million in fiscal year 2021.

 

Basic and Diluted Earnings per Share

 

Basic and diluted loss per share in fiscal year 2022 was $0.14, compared to basic and diluted earnings per share of $0.06 in fiscal year 2021.

 

Balance Sheet

 

As of December 31, 2022, the Company had cash of $2.9 million, compared to $3.9 million as of December 31, 2021.

 

Cash Flow

 

Net cash provided by operating activities in fiscal year 2022 was $0.6 million, compared to $1.8 million in fiscal year 2021.

 

Net cash used in investing activities in fiscal year 2022 was $0.9 million, compared to $2.0 million in fiscal year 2021.

 

Net cash provided by financing activities in fiscal year 2022 was $9,929, compared to net cash used in financing activities of $178,240 in fiscal year 2021.

 

Recent Development

 

On April 3, 2023, the Company completed its initial public offering (the “Offering”) of 3,390,000 Class A ordinary shares at a public offering price of US$4.00 per Class A ordinary share. The Class A ordinary shares began trading on the Nasdaq Capital Market on March 30, 2023 under the ticker symbol “CHSN.”

 

About Chanson International Holding

 

Founded in 2009, Chanson International Holding is a provider of bakery, seasonal, and beverage products through its chain stores in China and the United States. Headquartered in Urumqi, China, Chanson directly operates stores in Xinjiang, China and New York, United States. Chanson currently manages 33 chain stores under the “George●Chanson” brand in Xinjiang and three stores in New York City while selling on digital platforms and third-party online food ordering platforms. Chanson offers not only packaged bakery products but also made-in-store pastries and eat-in services, serving freshly prepared bakery products and extensive beverage products. Chanson aims to make healthy, nutritious, and ready-to-eat food through advanced facilities based on in-depth industry research, while creating a comfortable and distinguishable store environment for customers. Chanson’s dedicated and highly-experienced product development teams constantly create new products that reflect market trends to meet customer demand. For more information, please visit the Company’s website: http://ir.chanson-international.net/.

 

Forward-Looking Statements

 

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.

 

For investor and media inquiries, please contact:

 

Chanson International Holding
Investor Relations Department
Email: IR@chansoninternational.com

 

Ascent Investors Relations LLC
Tina Xiao
Phone: +1 917 609-0333
Email: tina.xiao@ascent-ir.com

 

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CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   December 31,   December 31, 
   2022   2021 
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $2,915,470   $3,896,812 
Accounts receivable   1,260,453    1,134,532 
Inventories   693,506    526,862 
Deferred offering costs   763,611    749,605 
Prepaid expenses and other current assets   833,238    438,045 
TOTAL CURRENT ASSETS   6,466,278    6,745,856 
           
Operating lease right-of-use assets   13,921,825    11,644,192 
Property and equipment, net   5,871,775    5,447,718 
Long term security deposits   958,320    1,066,027 
Long term prepaid expenses   110,988    92,301 
TOTAL ASSETS  $27,329,186   $24,996,094 
           
CURRENT LIABILITIES:          
Short-term bank loans  $434,959   $1,559,314 
Accounts payable   1,424,766    1,273,313 
Due to a related party   1,798,605    721,921 
Taxes payable   130,727    30,839 
Deferred revenue   6,958,160    6,051,683 
Operating lease liabilities, current   1,770,398    1,622,642 
Other current liabilities   1,014,452    1,055,199 
TOTAL CURRENT LIABILITIES   13,532,067    12,314,911 
           
Operating lease liabilities, non-current   12,620,070    9,846,224 
TOTAL LIABILITIES   26,152,137    22,161,135 
           
COMMITMENTS AND CONTINGENCIES          
           
SHAREHOLDERS’ EQUITY          
Ordinary shares, $0.001 par value, 50,000,000 shares authorized; 9,000,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively:          
Class A ordinary share, $0.001 par value, 44,000,000 shares authorized; 3,060,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively   3,060    3,060 
Class B ordinary share, $0.001 par value, 6,000,000 shares authorized; 5,940,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively   5,940    5,940 
Additional paid-in capital   869,400    869,400 
Statutory reserve   447,231    447,231 
Retained earnings (Accumulated deficit)   (183,842)   1,104,363 
Accumulated other comprehensive income   35,260    404,965 
TOTAL SHAREHOLDERS’ EQUITY   1,177,049    2,834,959 
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $27,329,186   $24,996,094 

 

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CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

   For the Years Ended December 31, 
   2022   2021   2020 
             
REVENUE  $13,272,075   $14,690,295   $10,313,512 
COST OF REVENUE   7,169,404    7,759,872    5,164,178 
GROSS PROFIT   6,102,671    6,930,423    5,149,334 
                
OPERATING EXPENSES               
Selling expenses   3,697,909    4,126,126    2,947,088 
General and administrative expenses   3,842,787    3,249,181    2,230,893 
Total operating expenses   7,540,696    7,375,307    5,177,981 
                
LOSS FROM OPERATIONS   (1,438,025)   (444,884)   (28,647)
                
OTHER INCOME (EXPENSE)               
Interest expense, net   (35,457)   (98,033)   (108,852)
Other income (expense), net   194,824    1,065,963    (11,946)
Total other income (expense), net   159,367    967,930    (120,798)
                
INCOME (LOSS) BEFORE INCOME TAX PROVISION   (1,278,658)   523,046    (149,445)
                
PROVISION FOR INCOME TAXES   9,547    16,277    14,584 
                
NET INCOME (LOSS)   (1,288,205)   506,769    (164,029)
Foreign currency translation gain (loss)   (369,705)   88,952    132,207 
                
TOTAL COMPREHENSIVE INCOME (LOSS)  $(1,657,910)  $595,721   $(31,822)
                
Earnings (loss) per ordinary share - basic and diluted  $(0.14)  $0.06   $(0.02)
Weighted average shares - basic and diluted*   9,000,000    9,000,000    9,000,000 

 

*Retrospectively restated for effect of 1,000-for-1 forward split and share issuances on March 27, 2021 (see Note 12)

 

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CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   For the Years Ended December 31, 
   2022   2021   2020 
Cash flows from operating activities:            
Net Income (Loss)  $(1,288,205)  $506,769   $(164,029)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:               
Amortization of operating lease right-of-use assets   2,533,074    2,226,128    1,387,154 
Depreciation   701,461    605,253    485,826 
Gain on forgiveness of loan under Paycheck Protection Program   -    (502,298)   - 
Loss from disposal of equipment   -    27,325    273 
Changes in operating assets and liabilities:               
Accounts receivable   (215,847)   (397,872)   (217,961)
Inventories   (206,264)   (46,384)   (94,227)
Prepaid expenses and other current assets   (430,717)   (175,630)   46,881 
Long term security deposits   84,374    (236,020)   (222,806)
Long term prepaid expenses   (26,504)   38,476    55,347 
Accounts payable   247,015    325,803    181,852 
Taxes payable   103,212    (26,347)   (73,994)
Deferred revenue   1,411,004    1,252,776    964,663 
Other current liabilities   (433,848)   98,362    27,689 
Operating lease liabilities   (1,927,407)   (1,918,095)   (1,130,991)
Net cash provided by operating activities   　551,348    　1,778,246    1,245,677 
                
Cash flows from investing activities:               
Purchase of property and equipment   (860,034)   (2,038,054)   (574,333)
Proceeds from disposal of equipment   -    7,133    - 
Payments made for loan to third party   -    (1,550,628)   - 
Proceeds from loan to third party repayment   -    1,550,628    - 
Net cash used in investing activities   (860,034)   (2,030,921)   (574,333)
                
Cash flows from financing activities:               
Proceeds from short-term bank loans   445,831    1,903,563    2,175,000 
Repayments of short-term bank loans   (1,474,129)   (2,683,814)   (2,168,388)
Proceeds from long-term bank loan   -    293,007    209,291 
Advances received from (payments made to) a related party   1,076,717    572,712    (791,036)
Payments made for deferred offering costs   　(38,490)    　(263,708)     (274,246)
Net cash provided by (used in) financing activities   　9,929    　(178,240)    (849,379)
                
Effect of exchange rate fluctuation on cash and cash equivalents   (682,585)   206,659    413,812 
    　    　　      
Net increase (decrease) in cash and cash equivalents and restricted cash   (981,342)   (224,256)   235,777 
Cash, cash equivalents and restricted cash, beginning of year   　3,896,812    　4,121,068    3,885,291 
Cash, cash equivalents and restricted cash, end of year  $2,915,470   $3,896,812   $4,121,068 
                
Reconciliation of cash, cash equivalents and restricted cash, beginning of year               
Cash and cash equivalents  $3,896,812   $4,098,546   $3,874,288 
Restricted cash   　-    　22,522     11,003 
Cash, cash equivalents and restricted cash, end of year  $3,896,812   $4,121,068   $3,885,291 
                
Reconciliation of cash, cash equivalents and restricted cash, end of year               
Cash and cash equivalents  $2,915,470   $3,896,812   $4,098,546 
Restricted cash   　-    　-     22,522 
Cash, cash equivalents and restricted cash, end of year  $2,915,470   $3,896,812   $4,121,068 
                
Supplemental cash flow information               
Cash paid for income taxes  $5,282   $9,981   $103,160 
Cash paid for interest  $37,277   $66,688   $113,848 
                
Non-cash operating and investing activities               
Payable for purchase of property and equipment  $463,556   $682,618   $7,283 
Right of use assets obtained in exchange for operating lease liabilities  $5,160,825   $2,420,359   $4,687,623 
PPP loan forgiveness  $-   $502,298   $- 

 

 

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